Subrogation is a term that's well-known among legal and insurance professionals but often not by the customers who employ them. Rather than leave it to the professionals, it would be to your advantage to comprehend an overview of the process. The more information you have, the better decisions you can make about your insurance company.
Every insurance policy you have is a commitment that, if something bad occurs, the insurer of the policy will make restitutions in one way or another without unreasonable delay. If your vehicle is hit, insurance adjusters (and the courts, when necessary) decide who was to blame and that person's insurance pays out.
But since figuring out who is financially accountable for services or repairs is regularly a time-consuming affair – and time spent waiting sometimes increases the damage to the victim – insurance firms often opt to pay up front and figure out the blame after the fact. They then need a way to recoup the costs if, when there is time to look at all the facts, they weren't actually in charge of the payout.
Can You Give an Example?
You are in a traffic-light accident. Another car collided with yours. The police show up to assess the situation, you exchange insurance information, and you go on your way. You have comprehensive insurance that pays for the repairs right away. Later police tell the insurance companies that the other driver was to blame and her insurance should have paid for the repair of your auto. How does your insurance company get its money back?
How Subrogation Works
This is where subrogation comes in. It is the method that an insurance company uses to claim reimbursement when it pays out a claim that turned out not to be its responsibility. Some companies have in-house property damage lawyers and personal injury attorneys, or a department dedicated to subrogation; others contract with a law firm. Usually, only you can sue for damages to your self or property. But under subrogation law, your insurer is given some of your rights for making good on the damages. It can go after the money that was originally due to you, because it has covered the amount already.
Why Do I Need to Know This?
For starters, if your insurance policy stipulated a deductible, it wasn't just your insurer who had to pay. In a $10,000 accident with a $1,000 deductible, you lost some money too – to be precise, $1,000. If your insurance company is unconcerned with pursuing subrogation even when it is entitled, it might opt to recover its losses by upping your premiums and call it a day. On the other hand, if it knows which cases it is owed and goes after them efficiently, it is doing you a favor as well as itself. If all $10,000 is recovered, you will get your full thousand-dollar deductible back. If it recovers half (for instance, in a case where you are found one-half accountable), you'll typically get $500 back, based on the laws in most states.
Moreover, if the total price of an accident is over your maximum coverage amount, you could be in for a stiff bill. If your insurance company or its property damage lawyers, such as accident lawyer pasadena, md, successfully press a subrogation case, it will recover your expenses as well as its own.
All insurers are not created equal. When shopping around, it's worth measuring the records of competing agencies to evaluate whether they pursue valid subrogation claims; if they do so quickly; if they keep their policyholders posted as the case goes on; and if they then process successfully won reimbursements right away so that you can get your deductible back and move on with your life. If, on the other hand, an insurance company has a reputation of honoring claims that aren't its responsibility and then covering its profit margin by raising your premiums, you'll feel the sting later.